Pharmaceutical company AstraZeneca sues to stop Utah law expanding access to discounted drugs
Sen. Evan Vickers, R-Cedar City, is pictured on the first day of the legislative session at the Capitol in Salt Lake City on Tuesday, Jan. 16, 2024. (Photo by Spenser Heaps for Utah News Dispatch)
Pharmaceutical giant AstraZeneca is suing Utah's attorney general and insurance commissioner over a law passed during the legislative session aimed at stopping drug manufacturers from limiting where hospitals and clinics can buy discounted medication.
Filed in May in federal court in the District of Utah, the company accuses the law of being unconstitutional and in conflict with prior court rulings.
Sponsored by Sen. Evan Vickers, R-Cedar City, SB69 deals with the federal 340B program, a decadesold provision in the Public Health Service Act that aims to supply hospitals and health clinics with drugs at a discounted price.
The program requires drug manufacturers to provide discounts on certain outpatient drugs for entities covered under the program, like hospitals, clinics, or Native American tribes.
According to the American Hospital Association, hospitals can pass savings from the 340B program along to patients by offering health care to uninsured patients, providing free vaccinations, or expanding mental and community health programs.
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But Vickers, who owns and operates a pharmacy in Cedar City, said the program is not popular among drug manufacturers, who have tried to limit where the entities covered under 340B can obtain the discounted drugs. Speaking on the Senate floor earlier this year, Vickers said manufacturers have been enforcing a 'one pharmacy rule,' where certain drugs can only be obtained from certain pharmacies.
'From their perspective it's expanded more than they would like, so they've tried to limit the access of drugs,' Vickers said. 'Essentially, you could have a patient being able to get a product at a discounted price in one town but not the other.'
SB69, which passed in March during the final week of the legislative session, tries to prevent this. The bill is relatively simple at just 53 lines, and states that drug manufacturers cannot restrict pharmacies from contracting with entities covered under the 340B program. It also restricts manufacturers from preventing the delivery of a 340B drug to any location authorized to receive it.
'I don't stand here professing that the manufacturers are happy with this, I will tell you they're not,' said Vickers earlier this year, telling his Senate colleagues that states that have passed similar legislation have been targeted by lawsuits. 'But what we're looking at is providing access to medication at a discounted price.'
Vickers was right. AstraZeneca, the global pharmaceutical company that generated more than $54 billion in revenue in 2024, is now suing Utah Attorney General Derek Brown and Utah Insurance Commissioner Jon Pike to stop the enforcement of SB69.
The Utah Attorney General's Office did not provide comment on the active litigation.
In the complaint, attorneys for AstraZeneca point to prior court rulings that supersede Utah's law.
'Apparently dissatisfied with the scope of federal law, the State of Utah has enacted a statute seeking to achieve under state law precisely the same result that federal courts have resoundingly rejected,' the complaint reads, accusing SB69 of requiring 'discounted pricing for sales at an unlimited number of contract pharmacies.'
According to AstraZeneca, the requirement in SB69 goes beyond the original intent of the 340B program, putting state law at odds with federal law and violating the Supremacy Clause of the U.S. Constitution.
Plus, the lawsuit alleges, SB69 violates the Contracts Clause of the Constitution because it interferes with agreements between drug manufacturers and the U.S. Department of Health and Human Services, as well as the Constitution's Takings Clause, which protects private property from being seized for public use, since SB69 requires AstraZeneca to transfer its private property (prescription drugs) to entities covered under 340B.
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